IRS Form 720, the Quarterly Federal Excise Tax Return, is a tax form that businesses complete quarterly to report and pay federal excise taxes. If your business sells goods or services that are subject to excise tax, you report and pay those taxes via IRS Form 720.
When to file Form 720?
- When You Must File. Since Form 720 is a quarterly Tax, you must file it four times per year on the following schedule: by April 30 for the first quarter, by July 31 for the second quarter, by October 31 for the third quarter and by January 31 for the final quarter.
What is a Form 720 excise tax Return?
Tax form 720, Quarterly Federal Excise Tax Return, is used to calculate and make excise tax payments on certain categories of income/assets. Excise taxes are taxes paid when purchases are made on a specific good. They are paid on purchases of specific goods.
How do I know if I need to file Form 720?
If you own a business that deals in goods and services subject to excise tax, you must prepare a Form 720 quarterly to report the tax to the IRS. The federal government charges an excise tax on specific types of products and services, and in some ways resembles a state sales tax.
What is an excise tax used for?
Excise taxes can be used to price an externality or discourage consumption of a product that imposes costs on others. They can also be employed as a user fee to generate revenue from people who use particular government services, revenue which should be used to maintain that government service.
How do I file a 720?
Businesses that owe excise taxes might need to file Form 720. How to fill out Form 720
- Enter your business’s information. Let’s start slowly with your business’s information.
- Fill in part one.
- Fill out Schedule A.
- Fill out part two.
- Fill out Schedule T and Schedule C.
- Fill out part three.
- File Form 720.
Who is required to file a Form 720?
Form 720 is a tax form required of businesses that deal with the sale of certain goods (like alcohol or gasoline) and services (for instance, tanning salons). These businesses are required to pay extra taxes, known as “Excise Taxes”, and they are accounted for through this form.
Can you file Form 720 electronically?
IRS is currently accepting electronically-filed Forms 720. Forms can be submitted online 24 hours per day.
Who is responsible for paying excise tax?
The three parties that must pay excise duty include the following: The individual or entity that manufactured or produced the goods. The individual or entity that was responsible for the manufacture of goods by way of hiring labour. The individual or entity responsible for the manufacture of goods by other parties.
What is the difference between an excise tax and a sales tax?
Sales tax applies to almost anything you purchase while excise tax only applies to specific goods and services. Sales tax is typically applied as a percentage of the sales price while excise tax is usually applied at a per unit rate.
Is excise tax good or bad?
An excise tax also increases the price of the taxed good or service relative to the prices of all other goods and services. While the price of the taxed item rises, the prices of all other items may either remain unchanged as the overall price level rises or fall slightly if the price level remains unchanged.
Does excise mean cut out?
An excise tax is a special tax levied on specific products sold within a country. To excise something can also mean to get rid of it. Interestingly, the word excise (ek-SIZE) used as a verb means to remove something by cutting it out.
Which is an example of an excise tax?
Excise taxes are internal taxes that are levied on the sale of specific goods and services, such as alcohol, fuel and tobacco. For example, the excise tax on a vehicle is a percentage of the total cost while the excise tax on a tobacco and gasoline is a fixed amount.
Do truckers have to file Form 720?
Anyone involved in the sales of goods or services, such as fuel, heavy trucks, and other goods in Part I and Part II of Form 720, must pay Excise Taxes using Form 720, Quarterly Federal Excise Tax.